11 13 September 2019 Minsk Belarus Rajssbno Alternative aggregates 2 Core inflation Constant tax index Analytical aggregation Regional indices Core inflation 3 Remove specific itemsconsumptions groups from the CPI ID: 1029737
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1. Alternative aggregatesRegional workshop on Consumer price indices11 – 13 September 2019Minsk, BelarusRaj@ssb.no
2. Alternative aggregates2Core inflationConstant tax indexAnalytical aggregationRegional indices
3. Core inflation3Remove specific items/consumptions groups from the CPIVolatile items like energy, vegetables, fruits, Tobacco and alcoholic beverage?No international consensus of what to exclude Unique core inflation in each country due to national specificationsTool typical for Central Banks
4. Core inflation, cont. 4Exclude items/consumption groups in cooperation with the Central Bank Redistribute the weights so they equal 100 or 1000 (or 1)Depending on whether you express your weights in per cent or per mille (or in one)Aggregate up to all item CPI
5. Constant tax index5Tax rates are kept constant in the observation period compared to the reference periodPurpose: analyse the effect of changed item related taxes by comparing with the CPIExpert usersE.g. Central Banks, Finance Ministry, other public authorities, trade unions, employers associations
6. Constant tax index, cont.6Examples of item related taxes
7. Constant tax index, cont. 7Different tax structures:Ad valorem, e.g. VATSpecific item tax, e.g. 1 Euro of the priceDifferent tax structures cause tax rate changes to have disparate effectsFurther reading: HICP-CT manualhttp://ec.europa.eu/eurostat/documents/272892/272986/HICP-CT_manual_2009.pdf
8. Analytical aggregates8Grouping of sets of item into «sectors»E.g. into goods and servicesE.g. imported and domestic goodsE.g. agricultural goods and other goodsAnalysing the main drivers of the inflationE.g. depreciating of local currency may give higher imported inflation Raise in salaries may give higher prices on servicesExpert users
9. Analytical aggregates, cont. 9Coicop -classificationDomestic goodsDomestic agriculture itemsCoicop ItemweightItemweightCoicop0111Flour 0.6Flour 0.6011101147Egg 1.7Egg 1.7011470117Cucumber 0.5Cucumber 0.50117Coicop ItemweightDomestic goods excl. agriculture items0112Sausages 2.6Sausages2.601120213Beer10.5Beer10.502130451Electricity29.2Electricity29.20451Imported goodsCoicop ItemweightImported agricultural items0111Rice 0.3Rice0.30111Imported goodsCoicop ItemweightImported items excl. agricultural items0212Red wine 5.1Red wine5.102120312Men’s suit 1.3Men’s suit1.30312
10. Analytical aggregates, cont.10Coicop -classificationServicesServices where labour supply dominatesCoicop ItemweightItemweightCoicop0622Dental services 10.2Dental services 10.206221211Hairdressing 6.7Hairdressing 6.7 1211Coicop ItemweightServices with other important price components0731Train tickets 3.7Train tickets 3.707310733Air Tickets 11.8Air Tickets 11.80733
11. Analytical aggregates, cont.11Challenges:Imported and domestic goods?Cooperate with the external trade statistics Partly imported, partly domestic?E.g. apples, tomatoesLabour supply and other important price components?
12. Regional indices12A national CPI should cover expenditure and prices throughout the countryPrice collection might be dropped in regions with sparse populationsPopulation data may serve as geographical weights in a stratificationRegional indices as stand alone indicesValuable in understanding how inflation varies across a countryImportant differences in regional inflationRequires expenditures for each region
13. Regional indices – construction13Close to constructing a national indexPrice relativesElementaryaggregates Item indicesCOICOP class indicesRegional stratum weightsRegional item weightsRegional COICOP class weightsCPI
14. Regional indices – construction14Price relativesElementaryaggregates Item indicesCOICOP class indicesRegional stratum weightsRegional item weightsRegional COICOP class weightsCPILack of regional expenditures and stratum weightsSmall sample sizes
15. Regional indices - restrictions15Small sample sizeExtend data collectionCombine regions into larger areasSome items are not available in every regionUse national item indices Lack of regional dataBreak down of expenditures to regional level reqires a reliable HBS or other good sourceWhat is a region?Region where expenditure take place?Region where the household do their purchases Simmilar to the resident vs the domestic approach
16. Regional indices – restrictions, cont. 16What is a region?Region where expenditure take place?Region where the household do their purchases? Cross-boarder shopping, internet purchase, etc. Similar to the resident vs the domestic approachHow to avoid double counting of expenditures?How to avoid omitting expenditures?